NHPC, the state-run hydroelectric power producer, which has often got stuck with environmentally sensitive projects, may be on the cusp of turning a new leaf on the back of progress made on three out of its four stalled projects and higher power generation in FY15.
Out of the four under-construction projects, Teesta Low Dam-IV, Parbati-II and Kishanganga, with an aggregate capacity of 1,290 MW, have seen definitive progress towards commissioning. While the geological issues of tunnelling has been solved for Parbati-II and work is likely to start this month, work on Teesta Low Dam-IV also resumed in November and is likely to be commissioned in the next fiscal year. Although Subansiri Lower, with a capacity of 2,000 MW, still faces headwinds from activists, Kishanganga project in J&K is slated for commissioning in FY 17.
Project delays have led to cost escalation, but NHPC will likely recover the cost by virtue of being in a regulated business, where the central electricity regulator revises tariff based on the cost involved. By original estimates, the four projects would cost nearly R18,000 crore, but Subansiri Lower alone has suffered cost overruns of more than Rs 5,000 crore.
“On an average, we are likely to see a 70% hike from the originally estimated tariffs due to delays and cost overrun,” NHPC chairman RST Sai said at a press briefing called to announce the quarterly results. He said the company would raise nearly R4,000 crore via loans and tax-free bonds to fund the ongoing projects.
NHPC also received a shot in the arm with environmental clearance for Dibang multipurpose hydropower-cum-flood projects, worth over R25,000 crore in Arunachal Pradesh. Also, clearances are on the way for Tawang-I and Tawang- II projects, with a combined capacity of 14,000 MW and costing R14,000 crore.
With the economy on the mend, NHPC has hinted that it hasn’t abandoned the idea of floating a thermal power generation subsidiary. The plan has been around for sometime but fuel supply constraints and issues surrounding the company had meant that it was relegated to the cold storage.
“The idea is to diversify risk as hydro projects involve greater risk compared to thermal projects,” Sai said and emphasised that the company was waiting for the right opportunity to enter thermal power generation.
An NHPC executive said a thermal power portfolio would make NHPC’s books healthier with a steady stream of projects going online, and cushion it against hydro project uncertainties.
NHPC, with installed capacity of nearly 5,000 MW, has been buoyed by its performance last fiscal. For the year ended March, 2015, the company posted a standalone net profit of R2,124 crore, up 117. What aided this was a 22% jump in power generation last fiscal.